UK - Citigroup's recent move into the buyout arena is unlikely to result in a major venture for the financial service company, actuarial consultant Punter Southall has said.

Last week, Citigroup announced it had purchased a £200m (€294m) defined benefit pension fund previously owned by Thomson Regional Newspapers (TRN).

In a briefing note commenting on the move, Punter Southall said: "It appears they will only be interested in closed pension schemes which have a very mature membership, since they are likely to want to limit their exposure to longevity risk."

The consultant argued for the pension buyout deal's favourable circumstances, where a scheme is well funded on the FRS17 basis and the sponsor is of a relatively insignificant size compared with the pension scheme. Such schemes were "few and far between", it said.

"A relatively insignificant company with a well-funded pension scheme may consider there to be little risk connected to the pension scheme, so may see little benefit in selling it on," Punter Southall added.

It concluded: "As such, it seem unlikely that solutions of this type will be appropriate for many more closed pensions schemes in the UK."

The note stands in contrast to comments made earlier this week by Watson Wyatt, arguing that Citigroup's move might be a token of the development of a new market.

Watson Wyatt argued that a strong covenant was the key to a cheaper buyout.

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